Well you made a number of assumptions and you discounted a medicare for all option just because none of the dem cans is pushing that in their platforms.
I discounted a “Medicare for All” option because single payer is an old 1900’s model which most developed nations have avoided, preferring to use a insurer-as-utility model, acknowledging that having experts run a health care program is actually cheaper than the government trying to figure it out as they go. :-)
1) select one insurance company to negotiate on behalf of everybody. This would allow that agent to force the drug companies and the various medical service providers to reduce costs.
Actually, everyone would get the same costs as the current Medicare and Medicaid programs, and no less. Government procurement contracts by law must be contracted at the best price the provider is able to offer, and economies of scale are subject to the law of diminishing returns. I get a much better deal going from buying 1,000 of a widget to 10,000; but the deal I get when I go from 10,000 to 1,000,000 isn’t as much of a discount, percentage-wise.
There is some money to be saved by collectivizing (see my last point in this article) but it’s not at the insurer/government level. They’re already getting the best prices.
2) eliminate malpractice lawsuits and replace that with criminal penalties for abuse, fraud etc.
I’m all for this, and have argued in other forums that the threat of malpractice is just the government’s cowardly way of dodging the need for new laws in this area. But the question of how much money would be saved is debateable; my SWAG is it’s around 6%. So, although it’s not nothing for the cost of medical insurance to drop from $1,000 a month to $940, it’s not a major bend in the curve.
3) allow for collective self insurance thereby eliminating the profits gleaned from the industry by insurance companies who by and large provide no service that the existing medicare apparatus can’t provide for 1/6th the cost.
Medicare is exceptionally efficient at operating their business
I’m sorry, but this is a myth commonly advanced by single payer advocates. The Washington Post factcheckers wrote THIS about it:
The Medicare figure of 2 percent is artificially reduced because some key functions are undertaken by other agencies — and because Medicare’s patients are unhealthier. Meanwhile, the 18 percent figure for private plans appears to be inflated, so it would be more reasonable to rely just on the 12 percent estimate.
But even if Democrats were to be conservative and say Medicare had administrative costs of 5 percent and private plans 12 percent, previous estimates of the administrative costs per patient indicate that Medicare is actually more inefficient than private insurance. We would be interested to see more recent calculations on this issue, but it certainly indicates that single-payer advocates are counting savings that might not materialize. Democrats should be cautious with this talking point to avoid Pinocchios in the future.
The article explains what those “key functions” are, and reminds us that the Medicare patient base has VERY different characteristics than the private insurer patient base (which contribute to this myth of efficiency).
Medicare, private insurance and administrative costs: A Democratic talking point — The Washington…
“Medicare has an overhead of about 3 percent. Private insurance has 25 to 30 percent that’s wasted.” — Sen. Jeff…
A short list:
- All of Medicare’s IT infrastructure is being handled by other agencies. If you want an apples to apples comparison on efficiency, those (massive) costs need to be added back in to Medicare.
- Most of the administrative costs that single-payer advocates say will disappear if the government takes over the program …. won’t disappear. Call centers, patient hotlines, claims processing…..they still have to be done.
- Since Medicare patients are on average much less healthy than patients in the average population, metrics which do not include the actual cost of treatment will skew to Medicare’s benefit. Put another way, Medicare costs are relatively lowered by the fact that their patients are unhealthier.
I am far from the only person to point this out:
Studies by Milliman and others show that when all costs are included, Medicare costs more, not less, to administer. Further, raw numbers show that, using Medicare’s own accounting, its administrative expenses per enrollee are higher than private insurance. They are lower only when expressed as a percentage — but that may be because the average medical expense for a senior is so much higher than the expense for non-seniors. Also, an unpublished ongoing study by Milliman finds that seniors on Medicare use twice the health resource as seniors who are still on private insurance, everything equal.
Let’s begin with a fundamental point that almost everyone tends to ignore. Medicare is not actually managed by the federal government. In most places it is managed by private contractors, including such entities as Cigna and Blue Cross. To argue that Medicare is more efficient is tantamount to arguing that when Blue Cross is called “Medicare” it is more efficient than when it is called “private insurance.” Further, there is nothing particularly special about the way Medicare pays providers. Private insurers tend to use the same billing codes and their payment rates are often pegged as a percentage of Medicare rates.
The Myth of Medicare's 'Low Administrative Costs'
Many people wrongly believe that Medicare is more efficient than private insurance; that view was often stated by…
Busting the Adminstrative Cost Benefit Myth | RealClearPolitics
By Tom Bevan - June 27, 2009 In his Newsweek column this week ( One Nation Under Medicare) liberal pundit Jonathan…
, although they probably do allow too much fraud to exist. Criminalizing medical fraud would help.
It’s already criminal.
Insurance companies are not exactly efficient, as you describe them, at reducing fraud. Their business model is to deny claims, because their entire profit margin is salvaged by denying claims.
This is an interesting point, considering myself and other friends of mine have had the personal experience of claims being denied by Medicare. :-)
The point isn’t valid. Medicare is no different than any other insurer in the US or any other universal care program, single payer or otherwise, in any other nation. Everyone has a budget, whether you’re government, a private corporation, or otherwise. If a universal care program *isn’t* denying claims, it means they’ve jacked up your taxes so high that they have more funds than they need, AND they’re approving claims for a third panel of chemotherapy for 80 year old patients who statistically have a 2% chance of five year survival from the treatment.
There is an entire stew of conflicting, often counterproductive, incentives structured into our healthcare system.
The money is actually in three places, if you want to cut costs:
- We pay our health care providers (doctors, nurses, med techs, everyone) around 40% more than they do in other nations. The problem is that if you bring that compensation down to world averages, you disrupt the system as people choose other occupations and you decrease quality.
- We’re bearing the cost of pharma R&D for the entire world, since we’re the only nation that hasn’t regulated costs. We can bring those costs down by law, but the blowback is that pharma R&D will be markedly diminished.
- Our provider “system” consists of tens of thousands of small businesses. Doctors work in small groups, most hospital chains are relatively small compared to what we normally refer to as “large corporations.” The solution here is to increase further the incentives (the ACA did some of this) for providers to band together in larger corporate structures like Kaiser in California.
- Make all health insurers tax exempt and require them to lower their premiums by their effective tax percentage.
Hope that helps.